Fresh economic fears send FTSE into reverse
The London stock market joined others across Europe in suffering hefty falls today amid fresh fears over the economic outlook.
London’s FTSE 100 index closed 2.5% down, or 137.6 points, at 5362.1 – the second successive day the top flight index dropped more than 2%.
Germany’s Dax-30 and France’s Cac-40 lost around 3%, with New York’s Dow Jones Industrial Average trading 2% lower.
The falls came after the European Central Bank (ECB) cut its 2009 growth forecast from 1.5% to 1.2%, and US data showed sluggish shop sales and mounting unemployment claims.
In London, banks were among the main victims with Britain’s biggest mortgage lender HBOS topping the Footsie’s fallers board with a near-7% slide. Barclays also lost 6%, with Lloyds TSB down a similar amount.
High street giant Marks & Spencer was another big faller as worries grew over its trading prospects. The retailer’s shares were down more than 5%.
The day saw both the ECB and the Bank of England hold interest rates steady as policymakers try to combat high inflation. The ECB compounded the gloom by downgrading its economic forecasts.
US jitters prompted by rising jobless benefit claims were bolstered by a report showing US private employers cut 33,000 jobs last month.
Anthony Grech, a market strategist at IG Index, said: “Today’s weakness has put a serious dent in the recovery that started in the UK stock market back in mid July and traders are likely to be eyeing the August lows at 5300 as the next potential line in the sand for the index.”
